SHIPPING RATES TO REMAIN HIGH DESPITE HINTS OF END TO PEAK SEASON
According to industry experts shipping market remains in a state of flux as a result of geopolitical tensions. Key indicators have shown that rates are starting to fall, suggesting the end to a peak season, but rates still remain higher than they were in 2023. The Shanghai Containerised Freight Index, which tracks the spot market on one of trade’s most important routes, was over $3500 for a twenty-foot equivalent unit (TEU) in June 2024, compared to just over $950/TEU at the same point last year. The Drewery World Container Index decreased 2% to $5,428 per 40ft container, with spot rates along most major routes falling or holding steady. Even with the fall, Drewery’s index is still 282% more than the average 2019, pre-pandemic rate of $1,420. And though some carriers will reportedly introduce rate increases in mid-August, easing demand and increased capacity for this lane have many doubtful that rate increases will stick.
Data from Freightos showed that there has been a 20% fall in rates since the peak period earlier in June. However, rates are predicted to remain high throughout the year, even assuming that the Red Sea update is resolved. If the crisis remains, then rates may return to the levels seen earlier this year. Tensions in the Red Sea and wider Middle East show no signs of abating, as attacks by the Houthi rebel group continue.
Certain hubs, used more since the beginning of the Red Sea crisis, are reporting delays as vessels wait for slots. Singapore is reporting a two-day delay period for vessels arriving, while hubs further down the chain in China are experiencing 12 hours delays. This is an improvement, however, from June, when ports in Asia were reporting longer wait times.
In its half-year financial report, Hapag-Lloyd raised its earnings outlooks for the year, fuelled by stronger than expected demand and freight rates. However, the carrier warned that this outlook was “subject to a high degree of uncertainty” and occurred as group revenue fell by 12%, to €8.8bn. DP World also said that revenues were up by 3.3%, but that earnings before tax, interest and depreciation had fallen 4.3% on last year.